• Globalization For MENA exchanges is now about putting roots at home as opposed to global mergers
• IPOs were the name of the game, ETFs are the new market reality now
• Technology for MENA exchanges was focused on equity, now it empowers the whole range of products
MANAMA, BAHRAIN: 25 April 2015 - Thomson Reuters, the world's leading source of intelligent information for businesses and professionals, today inaugurated the Federation of Exchanges (AFE) Annual Conference 2015 under the sponsorship of Bahrain Bourse in Bahrain, Manama.
The conference attracts 18 Arab Stock Exchanges and addresses the global trends impacting exchanges, foreign investments in Arab exchanges, reforms and regulations, upgrading trading platforms, and family companies.
In his keynote speech, Rasheed Mohammed Al Maraj, Governor, Central Bank of Bahrain, pointed out that the Central Bank of Bahrain is in the process of upgrading its exiting clearing and settlement, central depository, central registry frameworks, and the intermediary supervisory functions.
He added: “MENA capital markets continue to build and enhance liquidity, depth and diversification in terms of investment instruments, listings and capital flow at the regional and international levels. Market operators must pursue opportunities to enhance the position and competitiveness of the capital market not just domestically but also globally.”
Mr. Al Maraj pointed out that the reputation; quality and credibility of MENA markets are paramount noting that regulators have to carry out their roles in maintaining market integrity, ensuring fair regulation, and protecting the interest of the public investors.
“Central Bank of Bahrain continues to enhance its regulatory development program by embarking on various initiatives such as the establishment of a disclosure and corporate governance-based monitoring framework,” he said.
Shaikh Khalifa Ebrahim Al Khalifa, Chief Executive Officer, Bahrain Bourse, announced the launch of the Islamic real estate investment trusts (REITs) on Bahrain Bourse. “We also plan to launch the Bahrain Investment Market, an alternative market geared towards bridging the financing channels for small and growing businesses which will see the light at the end of second quarter of 2015,” he added.Shaikh Khalifa pointed out that this year retail investors have been given the opportunity to subscribe to Kingdom of Bahrain government Sukuks primary subscription through Bahrain Bourse with a total issuance size of US$ 663 Million and was successfully oversubscribed.
In the aftermath of the most unprecedented drop in oil prices, we have seen a significant opportunity to raise capital for projects through stock exchanges as opposed to the traditional financing channels,” he concluded.
Samer Habbal, General Manager of Financial & Risk, MENA, Thomson Reuters, said: “Thomson Reuters polled around 15 leading regional investment managers in March. The results of the survey show that funds are positive on many MENA stock markets despite the recent slide in oil prices.”
Mr. Habbal added: “According to the survey, Middle East fund managers may move further into cash as economic risk in the region rise, however, 13 percent still expect to raise their equity allocations to the Middle East in the next three months and 7 percent expect to raise fixed income allocations to the MENA region.”
He noted: “After a drought of five years, we are finally seeing positive signs of a pick-up in IPO throughout MENA markets. This activity will eventually contribute to deepening the markets and attracting fresh investor interest. According to the Thomson Reuters quarterly investment banking analysis, Middle Eastern equity and equity-related issuance totalled US$2.5 billion during the first three months of 2015, a 179% increase compared to Q1 2014 and marking the best first quarter by proceeds raised since 2008.”
Speaking at the Global trends panel, Meyer Sandy Frucher, Vice Chairman, Nasdaq, highlighted the significance of technology as a key element for the future development of capital markets. “Business is becoming globalised and regulators have to strengthen themselves by offering unique products and influencing investors in order to achieve growth and creativity across capital markets. We also need to lift up the level of information available to regulators and facilitate regulator education,” he said.
He pointed out that technology used to be all about equity, now it empowers the whole range of products. “IPOs were the name of the game, this is no longer the case and ETFs are an example of becoming a bigger driver. Change is not an enemy, we should be ready enough and need to enhance collaboration with other exchanges to build the whole infrastructure,” Mr. Frucher said.
Robert Shakotko , Managing Director, S&P Dow Jones Indices, said: “ETFs are important to the financial landscape and they are now the new market reality. The infrastructure needed for trading ETFs should be in place and investor education is now a must.”
Hüseyin Zafer, Vice President & CFO, Borsa Istanbul, explained that Istanbul bourse is trying to present itself as an intellectual market for businesses, while Nick Thornton, Head of Market Solutions, EURONEXT, noted that that exchanges currently have a different perspective of globalization. “For exchanges, globalization is now about putting roots at home rather than doing global mergers,” he concluded.